Harvard Business School professor: Half of American colleges will be bankrupt in 10 to 15 years

There are over 4,000 colleges and universities in the United States, but Harvard Business School professor Clayton Christensen says that half are bound for bankruptcy in the next few decades.

Christensen is known for coining the theory of disruptive innovation in his 1997 book, “The Innovator’s Dilemma.” Since then, he has applied his theory of disruption to a wide range of industries, including education.

In his recent book, “The Innovative University,” Christensen and co-author Henry Eyring analyze the future of traditional universities, and conclude that online education will become a more cost-effective way for students to receive an education, effectively undermining the business models of traditional institutions and running them out of business.

At the Innovation + Disruption Symposium in Higher Education in May, Christensen specifically predicted that “50 percent of the 4,000 colleges and universities in the U.S. will be bankrupt in 10 to 15 years.”

More recently, he doubled down on his statements, telling 1,500 attendees at Salesforce.org’s Higher Education Summit, “If you’re asking whether the providers get disrupted within a decade — I might bet that it takes nine years rather than 10.”

Comments

and conclude that online education will become a more cost-effective way for students to receive an education

The problem with this thesis is that the information which makes up what we call an “education” has been available outside the halls of academe for, well, centuries. The fact that some of it is now available online is a technical innovation which makes it even cheaper, but not qualitatively different. If the availability of educational material (i.e., textbooks and such material) is what will doom colleges, why didn’t they go extinct decades ago?

What most limits the dissemination of education now is probably America’s peculiar copyright laws. The availability of online—as opposed to printed—material doesn’t really change that.

I disagree. Degree requirements for jobs are what is keeping Higher Ed afloat. Remove those and they disappear.

The information is freely available sans copyright for many many fields. I think a part of it is the lack of initiative and habituation to the “go to college” traditions, but it’s more than that, “why bother looking it all up if I have to go to college to get the job I want anyways?”

Are we sure the internet is responsible? What about demographics? The baby boom which swelled the ranks of college students and filled the classrooms of all those schools is over. Declining enrollment is more likely due to fewer students, not the internet.

Education itself has become practically free; credentials cost more than ever. An obvious reform would be to replace required seat-time (aka credit-hours) with comprehensive exams when qualifying students for degrees.

Of course, those with a stake in the present system won’t want to permit a test-out option, and accrediting organizations will fight mightily to prevent alternate ways to qualify for a degree.

I would, therefore, expect to see real movement toward online learning with credentialing-by-test to appear in countries such as India or China which have smaller investments in the present system, and far less money to to throw into the existing system.

True, it’s anecdotal. Any number of high school students are now taking combined credit courses at the local community college, simultaneously getting credits to graduate from high school and credits applicable to state U’s such as Texas and A&M. Also, college students are taking community college courses for the basic stuff at community colleges instead of taking them at the much more expensive state U’s. First two college years is a lot cheaper at community colleges with fully transferable credits than at the university facility.

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